News

For Immediate Release

Chicago, IL – February 7, 2024 – Stocks in this week’s article are Itron, Inc. ITRI, EnerSys ENS, Centene Corp. CNC and General Motors Co. GM.

4 Low P/CF Stocks to Navigate the Economic Landscape in 2024

After an impressive 2023, the trajectory of the economy in 2024 hinges significantly on the dynamics of the labor market and the Federal Reserve's stance on interest rates. The Fed faces a delicate balancing act, contemplating policy choices that could either stifle economic momentum or risk reigniting inflationary pressure.

The job market has been painting a promising picture lately, with nonfarm payrolls expanding by 353,000 in January, surpassing expectations. The unemployment rate, holding steady at 3.7%, coupled with decent wage growth of 4.5% year over year, reinforces the robustness of the job market.

The recent decision of the Federal Reserve to keep interest rates unchanged underscores the need for consistent evidence of inflation easing before considering rate cuts. The interplay between economic growth and inflation containment will require astute and adaptive investment strategies to capitalize on opportunities and mitigate risks.

So, what’s the best investment strategy for 2024? We believe investment in stocks made on diligent value analysis is one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. There are a number of ratios to identify value stocks but none alone can conclusively determine their inherent potential. Each ratio helps an investor understand a particular aspect of the company’s business.

One such ratio, Price to Cash Flow (or P/CF), can work wonders in stock picking if used prudently. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per share basis — the lower the number, the better. Itron, Inc., EnerSys, Centene Corp. and General Motors Co. and boast a low P/CF ratio.

Why P/CF Ratio?

You must be wondering why we are considering this when the most widely used valuation metric is Price/Earnings (or P/E). Well, an important factor that makes P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company’s financial health.

Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.

A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company’s liquidity, which, in turn, lowers its flexibility to support these endeavors.

However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and take into account the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chances of falling into a value trap.

Here are four of the 10 stocks that qualified the screening:

Itron, a technology and service company that offers products and services for energy and water resource management, sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 289.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Itron’s current financial year sales and EPS suggests growth of 20.6% and 154.9%, respectively, from the year-ago period. Itron has a Value Score of B. The stock has rallied 21.9% in the past year.

EnerSys, the global leader in stored energy solutions for industrial applications, sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 10.4%, on average.

The Zacks Consensus Estimate for EnerSys’ current financial year EPS suggests growth of 60.3%, respectively, from the year-ago period. ENS has a Value Score of B. Shares of ENS have advanced 10.7% in the past year.

Centene, a leading healthcare enterprise, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 5.6%, on average.

The Zacks Consensus Estimate for Centene’s current financial year sales and EPS suggests growth of 4.3% and 15.1%, respectively, from the year-ago period. Centene has a Value Score of A. Shares of Centene have risen 4.4% in the past year.

General Motors, which designs, builds, and sells cars, trucks, crossovers, and automobile parts globally, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 20%, on average.

The Zacks Consensus Estimate for General Motors’ current financial year sales and EPS suggests growth of 1.6% and 13.7%, respectively, from the year-ago period. General Motors has a Value Score of A. Shares of GM have fallen 8.8% in the past year.

You can get the rest of the stock on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and backtest them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2221755/4-low-pcf-stocks-to-navigate-the-economic-landscape-in-2024?art_rec=blog-analyst_blog-up_next-ID01-txt-2221755

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Contact: Jim Giaquinto

Company: Zacks.com

Phone: 312-265-9268

Visit: https://www.zacks.com/

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Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.